Venezuela’s Inflation Rate Down from 2010

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Coro, May 4th 2011 (Venezuelanalysis.com) – Speaking at a press conference on Tuesday, Nelson Merentes, President of the Venezuelan Central Bank (BCV), confirmed that the percentage change for inflation in the country at the end of April 2011 was 1.5% – indicating a considerable reduction from the April 2010 reading of 5.2%.

A comparison of the first quarter of 2010 and 2011 also suggests a considerable improvement, with a percentage change to date of 7.5% for the first four months of 2011, as opposed to a rate of 11.3% in the corresponding January-April period of 2010

In addition, the annualised percentage rate to date for 2011 stands at 22.9% – 4.5% below the rate for 2010, which was 27.4%.

Merentes also pointed out that the Venezuelan economy was starting to grow again after a brief recession caused by the global financial crisis, with GDP expected to rise above 2% this year.

“It’s not a matter of whether we will grow or not – right now there is no analyst claiming that we won’t grow, the issue is now whether growth will be average or robust” he said.

In addition, Merentes also drew attention to a recent announcement made by the National Consumer Price Index (INPC) which recently recorded a reduction in the price of food items.

Jorge Giordani, Venezuela’s Minister of Planning and Finance, who was also present at Tuesday’s press conference, said that the results were extremely “encouraging” and attributed the improvement to the government’s “economic and social policies”.

Contrary to the measures adopted by Western economies in dealing with the global financial crisis – such as those in the European Union who continue to implement fiscal austerity measures – the Venezuelan government has pursued a more Keynesian economic model and continued to invest in social programmes and public services.

The Venezuelan government has also implemented a number of original measures to try and address the problem of high rates of inflation in the Bolivarian Republic. Some of these measures include: stimulation of the national production industry, the creation of subsidised food ‘distribution’ projects such as Mercal, Pdval and Abastos Bicentenario, as well as the development of policies and legislation aimed at curbing speculation.

These positive economic indicators come shortly after the announcement that extreme poverty in Venezuela had dropped to 6.9% in 2010, despite the economy having been in recession, a fact that may suggest that the measures taken by the government to control and reduce inflation are starting to take effect.

Elias Elijuri, President of the National Institute of Statistics (INE), explained that “It’s important to remember that a slump in the economy usually entails a rise in poverty”.

He added that extreme poverty had continued to decline as a result of putting the “human being first” in government policy.

In an interview with YVKE Mundial Radio, Director of the BCV, José Felix Ribas, confirmed that the existence of “favourable conditions” this year means that an overall lower rate of inflation should be achievable.